Prenda Law is a "copyright troll" that sued thousands for supposedly illegal downloads of porn movies before coming to a halt last year when its methods drew sanctions from several federal judges. Many of those sanctions are now on appeal.

New data was made public this week about the financial condition of John Steele, the Miami attorney who has been at the center of the scandal. The data was made public by Steele himself, who is fighting off his most recent slapdown: a $261,000 sanction from an Illinois federal judge who wrote that the lawsuit Prenda filed "smacked of bullying pretense."

Steele and two other Prenda-linked attorneys said they didn't have the money to pay. US District Judge David Herndon asked to see financial documentation proving their poverty. When he saw it, he was unimpressed. Steele and his former partner Paul Hansmeier "submitted incomplete, and to say the least suspicious, statements of financial condition," wrote Herndon. He ordered them to pay the sanctions plus another 10 percent for the delay.

Now Hansmeier and Steele have appealed Herndon's order. They've also ponied up some cash, posting a bond for $287,300, which would cover the entire sanction, plus interest, through April. Defense attorneys wanted the bond payment to be higher, but the sum mollified Herndon, who allowed Hansmeier and Steele to put the payment on hold while his order was appealed. "[P]laintiff’s counsel has clearly made a good faith effort to comply with the Contempt Order," wrote the judge.

Prenda: An “early pioneer in catching thieves”

That resolution should have resulted in a quiet period in this case, with at least several months' delay as the parties await their turn at the US Court of Appeals for the 7th Circuit. But it hasn't.

Herndon is still considering a separate motion for contempt based on what Steele and Hansmeier said in court. On Monday, Steele filed a response on that issue, and it's quite revealing.

Steele used the same combative tone he has struck before. Longtime Prenda-watcher Mike Masnick, who first published Steele's motion yesterday, wrote: "John Steele really loves the 'I know you are but what am I' form of legal argument, in which whatever he's accused of, he aggressively accuses his accuser of being guilty of the same."

The pile of documents about Steele's financial condition was submitted under seal. But Steele's own motion shows the outlines of the millions he is suspected to have earned from porn lawsuits. The selective disclosures-slash-denials all serve to make the point that he wasn't able to pay $261,000 in November 2013. (An interesting argument to make six months later, when he and his colleagues just paid for a bond of more than $280,000.)

Steele started off with an explanation of how Prenda came to be:

Steele and his partner, Paul Hansmeier (”Hansmeier”) were early pioneers in catching thieves and hackers who engaged in stealing copyrighted works and other computer related misdeeds, including computer hacking and copyright infringement. From 2010 until November 2011, Steele Hansmeier PLLC, represented various copyright holders in suits against individuals they had obtained evidence against using the same methods that the FBI utilizes to catch pirates and hackers. In November 2012, Steele and Hansmeier transferred its book of clients to a new law firm named Prenda Law, Inc. recently created by Paul Duffy. Mr. Duffy is an Illinois attorney who had known Steele for several years.

He went on to list several of the evidence points used against him—and actually agreed with them. But none of it "support[s] the proposition that Steele could have personally paid $261,000 in November 2013."

For instance, defense lawyers noted that Steele made $900,000 in 2011. "This is completely true," wrote Steele. "In fact, Steele believes he earned slightly more than that in 2011," but that has nothing to do with what he could pay in 2013.

Second, Steele at one point received $2.17 million and quickly distributed portions of it to other bank accounts. "The money in question resulted from Steele's deceased father's estate, which had recently sold a company owned by Steele's father for over 20 years," he wrote. The money was split between Steele and two siblings, with Steele receiving one-third. (The timing of these transactions is not specified.)

Third, Steele admitted that Steele Hansmeier, Prenda Law, and Prenda-linked shell Livewire Holdings received a total of $4.4 million in settlement payments. But he said the payments to Steele Hansmeier were all properly accounted for in his tax returns, and the payments to Prenda and Livewire don't matter because he denies owning those entities. (In an interview with Ars last year, Steele did say he is paid a "modest flat sum" each month as a part-time employee of Livewire.)

Steele also admitted to other points that came up in the sparring over his finances. Again, he didn't rebut them; he simply called them irrelevant. For instance, he subscribed to a website called Sovereign Man that advises readers on how to stash cash abroad. ("Learn how to diversify your life and assets geographically so that no government has power over you," the site suggests.) Response: "Steele is aware of no case law that makes it illegal for someone to sign up for emails from the Sovereign Man website."

He moved money between many bank accounts. Response: "Steele could have opened 1000 bank accounts in the same day, and his position is that such acts are perfectly legal."

Steele had an account on a secure e-mail service called Countermail. Response: "This was done largely because of Booth and the type of clients that Booth represents. Steele has been the subject of multiple identity theft attempts, and numerous attempts by hackers and pirates to steal personal information... Steele asserts that he has an absolute right to use any e-mail provider he chooses."

The defense lawyer in this case, Jason Sweet, isn't letting up. He has piled on a third request for sanctions, insisting that Steele continues to stymie his legitimate requests for information.

Hansmeier, Steele, and Paul Duffy "have engaged in a massive effort to hide, move, and transfer their assets in order to avoid complying with numerous sanctions orders and judgments levied against them," wrote Sweet. "There have been warnings. There have been orders. There have been directions on the record. Yet, Plaintiff’s Counsel continues to engage in dilatory tactics and dilettante arguments."